Since the Indian Government announced that they’ll impose a tax on crypto assets, the community is buzzing about it, wondering how they’re planning to do so. Now, the Ministry of Finance of the Indian Government has answered some questions in the legislative session regarding crypto tax.
The Minister of State in the Ministry of Finance, Pankaj Chaudhary explained in the lower house of the Parliament regarding crypto tax. He said that the Financial Bill 2022 is proposing to insert section 115BBH to the Income Tax Act 1961. This will provide for the taxation of income from transfers of virtual digital assets (VDAs). He said:
“As per the proposed section, any income from transfer of VDA shall be taxed at the rate of 30%.“
He also added that while computing the income from the transfer of VDA, one can only deduct the cost of acquisition.
Lok Sabha member Karti Chidambaram asked the Finance Minister “whether infrastructure costs in mining crypto will go towards permissible deductions”.
Minister Chaudhary replied that Infrastructure costs incurred in the mining such assets will not come under the cost of acquisition.
Besides the 30% tax, the Indian government is also looking at the classification of crypto under GST law. Moreover, this is in order to levy tax on the entire value of transactions. As of now, the law doesn’t account for clear classification of crypto. Also, crypto exchanges have to pay 18% GST for their financial services.
To this, A GST official said:
“There is a clarity needed in regard to levy of GST on crypto.”